August CPI inflation likely to be in 6.1-6.3% range: D&B

According to a report by Dun & Bradstreet, while a greater area is covered under sowing of kharif crops, especially rice and pulses, price correction in food articles is expected to materialise post-October.PTI | August 22, 2016, 15:55 IST

NEW DELHI: Achieving a 4 per cent inflation target in the near term seems unlikely, largely due to spike in prices of food and non-food items, and the August CPI numbers are expected to be in the range of 6.1-6.3 per cent, says a report.

According to a report by Dun & Bradstreet, while a greater area is covered under sowing of kharif crops, especially rice and pulses, price correction in food articles is expected to materialise post-October.

D&B expects WPI inflation to be in the range of 4-4.2 per cent and that of CPI to be 6.1-6.3 per cent in August this year.

"Achieving a target of 4 per cent CPI inflation in the near term seems unlikely. The build-up of inflationary expectations owing to the 7th Pay Commission award and the rearing up of the food (prices) along with non-food inflation would continue to keep inflationary expectations on upside," Dun & Bradstreet India Lead Economist Arun Singh said.

"The revival of industrial output also depends on the resurgence of demand, especially from the rural sector, which in turn, also depends on the prospects of the agriculture output. Even as the June IIP data shows some positive signs, a sustainable positive growth could only confirm the trend."

Going forward, the report noted that increasing agriculture productivity could help in controlling food inflation.

"The model Agricultural Land Leasing Act, 2016, which seeks to permit owners to lease out agricultural land to tenant farmers, should be passed as it would enable consolidation of farm land, better mechanisation and lead to land improvement by allowing tenant farmers access facilities like credit, thereby enhancing productivity in the agricultural sector," Singh added.